How to Buy Overseas Property Safely - Turkish Connextions

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BUYING COSTS Are you really clear about the true costs of buying a property? To provide a helping hand with your budgeting, we’ve picked a typical holiday home and itemised the costs that come with buying it – and the ongoing costs. This example is a traditional fi nca in Sentenil in Andalucia. 18 AIPP CONSUMER GUIDE
t’s easy to get excited about buying an overseas property and quite rightly too, owning a bolthole you can return to time and again and spend increasing periods of time in later life is I an aspiration for many. But you also need to keep a clear head and face up to costs other than the buying price, from one-off purchase expenses through to ongoing maintenance costs. You should have researched the country you plan to buy in and have a good understanding of the fees involved in purchasing a property – land registry, legal fees, etc – and your agent should be able to give you the detail on this. If you require funding, mortgage availability and interest rates will play a key part in your monthly outgoings and you should be clear on what you can and cannot afford. Exchange rate fl uctuation is an important factor and you may want to tie yourself into a pre-agreed rate with a specialist currency provider for monthly overseas payments so you have no nasty surprises if the rate moves against you (equally though, you won’t usually benefi t if the rate improves – for more information on currency see page 39). Many people choose to offset their monthly costs through rentals and if this is part of your plan, you need to have researched the area to see what similar properties charge per week in the high and low seasons and understand how many weeks occupancy you can expect (for more information on renting out your property see pages 28-29). The example below outlines typical one-off purchase costs, this happens to be in Spain and other countries will vary, plus the monthly repayments based on borrowing 70% of the purchase price. Obviously the mortgage repayments revolve around the amount borrowed but some of the one-off costs – legal fees for example – will also be less for a lower-priced property. PURCHASE PRICE: €379,500 (£307,502) MORTGAGE OPTION Capital repayment mortgage of 70 per cent LTV (€265,650) with an interest rate of 3.47 per cent and a 25-year term. ONE-OFF PURCHASE COSTS Deposit (30 per cent of €379,500) €113,850 (£92, 237) Closing costs (notary, land registry, purchase tax, lawyer) €30,360 (£24,599) TOTAL ONE-OFF PURCHASE COSTS £116,836 ONGOING COSTS (NOT TAKING INTO ACCOUNT ANY RENTAL INCOME) Monthly mortgage repayment (over 25 years) €1,326 (£1,074) Annual council tax €128 (£103) Utilities per year (has solar system, self-suffi cient water and electrics) zero TOTAL ANNUAL OUTGOINGS £12,991 TOTAL MONTHLY OUTGOINGs £1,082 RENTAL INCOME: This property should rent for €500-€1,000 per week (depending on time of year) and 40 weeks might be possible through good marketing. These fi gures are a guideline only. THE REAL DEAL: Budget to have £117,000 in the bank to take ownership of this property with a 70 per cent LTV mortgage. This would make the property’s annual running costs around £13,000 If you let the property, you’d need to factor in management costs and potential income tax on rentals. 2 BUYING YOUR PROPERTY AIPP CONSUMER GUIDE 19
Page 1 and 2: HOW TO BUY OVERSEAS PROPERTY SAFELY
Page 3 and 4: WELCOME Welcome to the AIPP’s Con
Page 5 and 6: SECTION 4 ABOUT THE AIPP 32 The rol
Page 7 and 8: Emerging or depressed markets can o
Page 9 and 10: WHAT TO BUY - RESALES S econd-hand,
Page 11 and 12: KNOW BEFORE YOU GO or some property
Page 13 and 14: INSPECTION TRIPS lthough not the ma
Page 15 and 16: via an agent, bear in mind that an
Page 17: ROLE OF THE DEVELOPER ove them or h
Page 21 and 22: unning costs/community charges you
Page 23 and 24: LEGAL: n the UK we routinely use a
Page 25 and 26: MORTGAGES n the current climate the
Page 27 and 28: KEEPING YOUR INVESTMENT SAFE INSURA
Page 29 and 30: SIPPS: BUYERS BEWARE ou may be vagu
Page 31 and 32: SECTION CHECKLIST: WHO’S WHO IN T
Page 33 and 34: 4 AIPP WHAT THE BADGE MEANS? We rec
Page 35 and 36: CODE OF CONDUCT n a largely unregul
Page 37 and 38: 4 AIPP AIPP AWARD WINNERS Best Smal
Page 39 and 40: ASAS Pan Gulf for Real Estate Inves
Page 41 and 42: E Ecoresorts sales limited Ecoresor
Page 43 and 44: Island Real Estate International SL
Page 45 and 46: Price Brown & Company Spain daphne@
Page 47 and 48: Tenerife Property Shop S L Spain br
Page 49 and 50: AIPP MEMBERS DIRECTORY FINANCE Exce
Page 51 and 52: For a full and updated list of AIPP

How to Buy Overseas Property Safely - Turkish Connextions

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